• The Pound Sterling rises to a fresh monthly high near 1.3000 against the US Dollar ahead of key economic data for both the UK and the US.
• Fed Chairman Powell may signal in Jackson Hole whether the central bank will cut interest rates by 25 or 50 basis points (bps) in September.
• BoE’s Governor Bailey could uncover uncertainty over subsequent interest-rate cuts.

The Pound Sterling (GBP) posts a fresh monthly high near the psychological resistance of 1.3000 against the US Dollar (USD) in Tuesday’s London session. The GBP/USD pair demonstrates sheer strength as the outlook of the US Dollar is bleak amid firm speculation that the Federal Reserve (Fed) will start reducing interest rates in September.

The US Dollar Index (DXY) – which tracks the Greenback’s value against six major currencies – edges higher to near 102.00, but it remains close to a fresh more-than-seven-month low. 

Sluggishness in the United States (US) economic data of July suggested that the economy is not overheated anymore.  The labor market has cooled down, and inflationary pressures remain on track to return to the desired rate of 2%. 

This week, the major triggers for the US Dollar will be the release of the Federal Open Market Committee (FOMC) minutes and Fed Chair Jerome Powell’s commentary at the Jackson Hole (JH) Symposium, which are scheduled for Wednesday and August 22-24, respectively. Investors will look through the FOMC minutes and the JH Symposium to know whether the Fed will pivot to policy normalization aggressively or gradually. 

A Reuters poll carried out between August 14 and 19 shows that 54% of the respondents think that the Fed will cut interest rates in each of its remaining meetings this year.

On the economic data front, investors await the US preliminary S&P Global PMI data for August, which will be published on Thursday. The flash Composite PMI is estimated to come in at 53.7, down from the prior release of 54.3, suggesting that the economy expanded at a slower pace.